In a breather to life insurance companies, the Insurance Regulatory and Development Authority (IRDA) has extended the deadline for realigning all their existing products to the new regulatory guidelines to Jan 1, 2014.
The earlier deadline was October 1.
“The authority received representations from the industry seeking extension of time for implementation of the regulations…to enable the insurers to cope with system readiness/ deployment (of staff and agents) for the products cleared and to address other issues such as training for the field force,” IRDA said in a circular.
Under the new guidelines, life insurance companies will not be allowed to offer guaranteed highest net asset value (NAV) products in the unit-linked segment and products linked to an external index from October 1as they are prone to mis-selling.
The insurers are required to re-file their products as the IrDA’s new guidelines prescribe a higher insurance cover plus other benefits such as a higher minimum surrender value and death benefit.
In the case of unit-linked products (Ulips) the regulations require, life insurers to inform customers about changes in the yield of the Ulip every month.
Life Insurance Council, the industry body for life insurers had earlier sought an extension of the deadline. If the deadline was not extended, life insurance companies would have been able to offer only limited number of products which may have lead to a slowdown in sales for them.
The existing policyholders for group policies will be given an option to switch over to the revised product under the new norms or continue with the old policy if a specific written consent is obtained by the group policyholder.
A senior official from IRDA said the regulator is granting priority wise approval to life insurance companies and has approved 350 products so far. The official said the regulator will approve 150 products in the next couple of months. “With the three month extension, life insurance companies including state run Life Insurance Corporation will get all their products approved by December 31{+s}{+t},” the official said.